Osborne abandons pension tax relief reform

Chancellor George Osborne has reportedly axed plans to overhaul pension tax relief as part of the upcoming Budget.

Osborne had promised to examine a potential overhaul of the system as part of his July 2015 Budget, with options including a move to a flat-rate system, or a more dramatic overhaul to convert the system and bring it into line with the tax treatment of Isas by taxing contributions.

However, just over a week before the Chancellor was expected to announce a response to the consultation at his 2016 Budget, the plans have reportedly been dropped.

He says: “Far from saving money, the uncertainty created by the consultation and scare stories from former ministers has led to a surge in pension contributions and there will be a heavy cost to this for the Treasury.

“This reaffirms my long held view that trusting politicians to make significant policy decisions on pension tax relief is like trusting a troop of foxes to babysit a brood of chickens.

“The pension saving public would be better served by an independent Pension Commission with a mandate to manage UK pension policy and provide certainty and confidence to savers.”